The question of whether a landlord should self-manage or hire a professional property manager is always a big decision for property investors.
Given there are many first-time investor landlords in the market, property managers are being asked to prove their value more than ever.
One of the biggest concerns for new landlords (and tenants) is not having the same property manager for the length of the lease. Industry surveys back up this concern showing that staff turnover is reasonably high within the property management field.
Successful property management is built on trust and open communication. Establishing a relationship with the landlord and tenant is difficult to do when a property manager changes every three to six months, and often without notice.
Landlords understandably lose confidence and begrudge paying for a service that is seemingly unreliable.
The alternative is self-management. Whereby the management of the property – including marketing and advertising, tenant vetting, bond lodgement, rent collection, routine inspections, maintenance and repairs and tax reporting – is back in the hands of the landlord.
However, self-management isn’t without risk. And many DIY landlords, who self-manage with no help at all, aren’t aware of these potential risks.
The Risks of Self-Management:
- Not knowing the market well enough to set the right rent and attract the right tenant.
- Not having appropriate insurances in place for the type of property and tenancy.
- Not understanding the landlord-tenant relationship and obligations, rights, and responsibilities of managing a property.
- Not having the time, skill, expertise or knowledge to do proper tenant screening and background checks.
- Not having the time to keep up-to-date with compliance or conduct regular inspections and address maintenance and repairs.
- Not having the proper processes and systems in place to stay on top of rent collection and manage arrears.
So, how does hiring a professional property manager compare?
The Benefits of Hiring a Property Manager
Cost Saving, Not Spending
Many landlords opt to self-manage over hiring a qualified property manager because they think it will save them money – on average between 5%, and 7% commission, depending on the agency – when often it can end up costing them down the track.
Professional expertise and knowledge mean setting correct rent, minimal vacancy times, higher quality tenants and systems and processes that monitor rent payment making sure you get paid on time, every month. Not to mention, management fees are tax deductible.
“Property managers negotiate the rent and terms of the lease better than I could as they are experienced in this area,” says property investor and landlord, John. “They handle the tenant queries and push back if tenant requests are unreasonable. Their value and the peace of mind I get by having a property manager is worth more to me than the fees they charge.”
Legal Eagle
The landlord-tenant relationship is regulated by the Residential Tenancy Act of each state and territory in Australia. A good property manager is across landlord obligations, rights, and legal responsibilities – particularly around property safety for the tenant and maintenance and repairs.
They also ensure lease agreements are documented in writing and shared with all parties.
For a DIY landlord, it can be a lot of information to stay across.
Time and Resources
Not every landlord lives within easy travel distance to their investment property and not every landlord is able to drop everything to respond to issues at the property. This is where hiring a local, professional agency to manage the property saves time and reduces stress.
Investment property owner, Lucy agrees: “We couldn’t possibly manage our own properties, we don’t have the time, knowledge or the experience. Nor do we want to. Having a property manager gives us peace of mind and allows us to concentrate on what we know and do well.”
A good local property manager will arrange regular inspections and, when needed, be able to tap into their network of trades and quickly communicate and address any problems. Professional property managers help to smooth tenant and landlord issues on the landlord’s behlaf by taking any emotion out of the situation.